COBRA MYTHS
MYTH NO. 1:
ONE COBRA NOTICE COVERS BOTH SPOUSES
Reality:
In Underwood v. Fluor Daniel, Inc. 1997 U.S. App. Lexis 1410 (4th Cir.
1997), the court awarded statutory penalties to a dependent spouse who did not
receive a separately addressed COBRA notice even though the reason the spouse
lost continuation coverage was her failure to pay premiums.
MYTH NO. 2:
PARTNERS ARE EMPLOYEES FOR ALL COBRA PURPOSES
Reality:
Under final IRS regulations, partners do not count as employees for purposes of
the COBRA exemption for employers with fewer than 20 employees.
MYTH NO. 3:
THERE'S NO SUCH THING AS STATE LAW CONTINUATION
COVERAGE
Reality:
In Illinois, continuation coverage is required for group health plans, and such
coverage can be required for up to ten years in the case of a 55 year old
divorced or widowed spouse.
MYTH NO. 4:
COBRA NOTICES ARE ONLY REQUIRED WHEN AN EMPLOYEE OR COVERED FAMILY
MEMBER INCURS A QUALIFYING EVENT
Reality:
COBRA notices are also required when an employee or covered spouse first becomes
eligible for group health coverage (this includes, as an example, a new spouse,
who should receive a separate notice of COBRA rights when coverage begins).
MYTH NO. 5:
COBRA REQUIRES INVOICES AND LATE PAYMENT NOTICES TO BE SENT TO
EMPLOYEES ON CONTINUATION COVERAGE
Reality:
The only notice required in connection with a qualifying event is the statutory
COBRA election notice. There is no
duty to give any subsequent notices of premium due dates, non-receipt of
payment, or any impending loss of coverage for failure to pay premiums.
However, employers have to provide notice and an extended payment period
if a COBRA beneficiary tenders a substantial partial payment of a premium for
continuation coverage.
MYTH NO. 6: COBRA
CONTINUATION COVERAGE ENDS AT AGE 65
Reality:
Continuation coverage ends when an employee or dependent on COBRA becomes "entitled" to Medicare. This means actual enrollment in the Medicare program not
just attaining eligibility to enroll at age 65.
Andrew
S. Williams
Aronberg Goldgehn Davis & Garmisa
One IBM Plaza, Suite 3000
Chicago, Illinois 60611
312/755-3145
awilliams@agdglaw.com
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